Well there’s a relief, or that’s how the markets saw it, anyway.

Larry Summers has done the honourable thing and pulled out of the race to be the next chairman of the US Federal Reserve, opening the door to Janet Yellen, already the vice-chairman and widely seen as an interest rate uber-dove willing to keep the whole charade of monetary activism going at all costs.

Market interest rates fell accordingly. Yellen is seen as a champion of unconventional monetary policy, which markets like; rightly or wrongly, Summers was considered more cautious. Whether it actually makes any difference to the immediate policy choice is rather more questionable.

Fed chairmen can influence policy over time, and to a limited extent they can tie the Fed’s hands with “forward guidance”, making it less easy to switch course.

But even more so than the Bank of England’s Monetary Policy Committee, the Fed’s Open Markets Committee is made up of an eclectic and individualistically minded lot. They are not going to be pushed around by either Summers or Yellen.

In any case, for the time being, Ben Bernanke continues to rule the roost, and it will be he who presides over this week’s crucial meeting to decide on when to begin tapering the Fed’s asset purchase programme – otherwise known as quantitative easing (QE) – and at what pace.

Money markets are understandably nervous, perhaps more so than at any stage since QE began, though admittedly, this doesn’t yet show up in interbank and other short-term rates. More than anything else, QE has come to define the policy response to the financial crisis and the Great Recession that followed. It’s what governments resorted to once they realised the public finances couldn’t withstand further fiscal stimulus.

On the Right, money printing is also widely, though by no means universally, considered an acceptable form of government intervention in the free market economy, in a way fiscal action isn’t. With Milton Friedman as the mentor, it was something that economists and politicians from both Left and Right could go along with.

In any case, with its cessation, we may be about to find out the answer to a number of big economic questions of the past five years.

Is the economy now sufficiently recovered to be able to withstand the removal of life support; are financial markets and other asset prices no more than a bubble sustained by money printing; likewise, has QE merely delayed, or extended, the economic adjustment, rather than helped rectify it; and how long can central bankers keep the lid on interest rates once asset purchases cease?

On the latter question, even the threat of Fed withdrawing stimulus measures has caused interest rates to rise globally, albeit not yet precipitously in most major advanced economies.

I’ve been accused, rightly in some respects, of swinging both ways on QE – of sometimes criticising it and at other times arguing that it was the only way of preventing an economic calamity from turning into a depression.

These two positions are not necessarily contradictory. When it first started, the purpose of QE was similar to that of delivering a massive dose of adrenaline to a heart-attack victim. The banking system was destroying money at a calamitous pace, threatening a domino effect of bankruptcies throughout the economy.

This had to be countered. Indeed, the main criticism monetarists make of central banks is not that they acted inappropriately, but that they didn’t act swiftly enough. Yet like a drug, the longer it goes on, the less effective it seems to be, and the more obvious its undesirable side-effects become. When to stop has always been the key question about QE.

In Hilaire Belloc’s cautionary tale, Matilda cries “fire” so often “it made one gasp and scratch one’s eyes”. Eventually, she tiptoes to the telephone and summons up London’s “noble fire brigade”. Her long-suffering aunt in the end succeeds in persuading the firefighters they are not needed, but “even then she had to pay, to get the men to go away”.

When inevitably, there actually is a fire, nobody believes Matilda, “for every time she shouted 'Fire’, they only answered 'Little Liar’”, with the result that she was burned alive.

The parallel is not an exact one because Matilda was a pathological liar. Nobody would suggest that about critics of QE. They are essentially right to shout “fire”, for everyone knows that the longer it goes on, the more dangerous it becomes. But it hasn’t yet resulted in the disastrous outcomes they predicted.

All the same, there is some hugely authoritative support for the idea that eventually it will, not least the Bank for International Settlements (BIS), an organisation which came as close as any to predicting the financial crisis.

So when the BIS’s former chief economist, Bill White, says “this looks to me like 2007 all over again, only worse”, we’d better sit up and take notice. For all the talk of a recovering world economy, to Mr White we are merely in some kind of delusional calm before the storm.

What is also true, however, is that much the same voices have been warning about QE all along – first it was runaway inflation they worried about most, and now that this has turned out to be of little immediate concern, it tends to be the dangers of capital misallocation and asset bubbles.

Again, on one level, they are absolutely right. Evidence of smoke is already there for all to see; but at this stage, it’s hard to think it as a raging fire. So the temptation is to ignore the jeremiahs.

Some criticisms of QE are more valid than others. The already well-off, the asset-rich, and relatively elderly are the chief beneficiaries, and the low paid and young the most disadvantaged. This makes complaints from richer pensioners seem somewhat hollow.

The vast bulk of Britain’s wealth — property and financial assets — is held by the over-55s. They would be seriously less wealthy without QE. Even so, it’s plainly right to worry about the distortions QE is causing, not least interference in the way busts clear out the old and useless and bring in the new. Eventually the critics will be right, but by the time they are everyone will be so used to them crying wolf that they will, like Matilda, be ignored.

With this in mind, central banks have begun to ease back. The Bank of England ceased asset purchases nearly a year ago. So far, this doesn’t seem to have impeded the bounce in the economy. Growth in money supply is pretty much back to normal without the Bank’s support.

Withdrawal by the Federal Reserve is plainly a much more portentous moment, if only because the spillover effects in the rest of the global economy are likely to be so much greater. Whatever the strength or otherwise of the US recovery, a negative feedback shock from the rest of the world, particularly puffed-up emerging markets, looks all too possible.

Presumably, Yellen, Bernanke, et al, are factoring this into their thinking. Or maybe not. Until proved otherwise, monetary policy always tends to be a home game.